How to start investing money? CD, Mutual Funds, Stock, ETC.

[BlueOvalStangGT]

Over the last 2 years I have saved up about $3k that I have been putting away for retirement. Its currently in a Bank of America savings account with an almost non existant interest rate. I think its time to start with bigger and better things. I know a little bit about CD's, Mutual Funds etc like what they are, how safe they are and stuff like that but I have no idea how to go about starting/buying them. Where can I go to learn more about them and to set on up? What do you all suggest?

 

[Joes95GT]

Because of my age, I opened up a Roth IRA when I was 16 and I've been putting in anywhere from 50-100 a month, depending how much extra cash I have at the end of the month.

One of the good advantages is that it's relatively safe because of lower interest rates. I think my cumulative interest rate over the past ~4 years has been somewhere around 9.5%.

There are different types of IRA's with different "aggressiveness" so if you are looking for more of a risky, higher interest rate-type of account, it can be done, but I don't see the sense in it because of our ages.

I have my account set-up through MetLife (because my cousin's grandfather works there and set up my account for me), but I'm sure there are tons of other companies to go to.

I like my account because it's easy. I don't have to actually send the money off each month - it's ACH debited out of my account, which means it's basically taken out on the 7th of each month for however much I authorize to be taken out. Also, when you take the money out of the account, you don't have to pay taxes on it, because the money you put it has already been taxed once (net pay).

Joe

 

[whitesnake1994]

Put it in the stock Sirius Sattelite Radio (SIRI). I bought it at 3 bucks, and i am sure it will go to 20 in less than 2 years. Just look at XM (XMSR)and know that sirius is not too far behind them. and also when howard stern signs on it will surely jump..

 

[whitesnake1994]

or you could buy 7 shares of google

 

[krahkin]

If you're still young, be aggressive. As you get older, start moving your portfolio toward the passive. Roth IRA is great when combined with a 401K, great tip!

 

[yellow1995Cobra]

A good start is a orange savings account. Check out ingdirect.com

Interest rate is 3.75% right now, and its a saving account that is linked to your checking account so you can move money between the two online. They offer CD's as well if your looking to tie money up longer. Personally, id go with a savings account like this, and invest a bit in the stock market. You can use scottrade to invest in stocks. Retirement fund at this point isnt a bad idea either..

 

[WHITE94COBRA]

Go talk to a financial advisor, I would recommend a charles shwab, or merill lynch for consultation purposes on stocks bonds and the like, for Cd's Ira's go to your bank's financial advisor.

 

[94_302]

I don't know that much about investments however after my Accounting class last year my professor in his final e-mail said this. Good luck in your investing.

In Chapter 8, we learned the time value of money. Make me happy and open yourself an individual retirement account (ROTH IRA). A good mutual fund should return on average about 12% annually. Most of you are 20 years old. If you put $50 in an account and then deposit $50 monthly until you reach retirement age (65), you’d be a millionaire ($1,083,512 tax-free). Let the time value of money work for you!

 

[93 teal terror]

A good start is a orange savings account. Check out ingdirect.com

Interest rate is 3.75% right now, and its a saving account that is linked to your checking account so you can move money between the two online. They offer CD's as well if your looking to tie money up longer. Personally, id go with a savings account like this, and invest a bit in the stock market. You can use scottrade to invest in stocks. Retirement fund at this point isnt a bad idea either..

I opened an account with them and its definatly easy and i have them put $25 a week in. I dont think about it and dont miss the money. I also have about $2500 tied up in five stocks and that have increased an average of 45.1% in the past two years.

 

[BlueOvalStangGT]

Well how do you open a Roth IRA account! Or any account for that matter!

 

[ROLLIN5.0]

All of the suggestions on here are good ones. Remember though, the key to a successful portfolio is diversification. I would start at WWW.MONEY.COM. It is a CNN website, and you should be able to find the basics on getting everything started there. Risk, and reward go hand in hand when making investments. The more risk- market risk+unique risk, the more return you should expect from that investment. Investments with little to no risk have a low amount of expected return. You will want to split the money up into low risk, moderate risk, higher risk. The younger you are, the more risk you can take in hopes of getting a large return (you have longer to recovery if you get hit), but you still want to have the lower risk investments as well. If I were in your position, I would look at starting an IRA definately, then set some money aside to get started with stocks, and mutual funds. I can give you a quick run down on investing in the stock market if you would like (what all the abbreviations mean, what to look for, diversification, etc). E-mail me if you want. No I'm not a stock broker, and NO you don't need an advisor (they just scrape off the top of your money). Why not educate yourself, and cut out the middle man? Although some of the stocks mentioned are viable options, the last thing you want to do is throw all of your money in one basket. You might as well get on SPORTSBETTING.COM, and let it all ride on the Rose Bowl.
Brandon

 

[Joes95GT]

I don't know that much about investments however after my Accounting class last year my professor in his final e-mail said this. Good luck in your investing.

See...I should be a professor. :Zip2:

Keven, you can get them pretty much anywhere. Find yourself a financial consultant (preferably using one that your parents use, if they do), and talk to them. Roth IRA's are very simple and they don't require any in-depth knowledge or great understanding of how the stock market works.

Joe

 

[BlackVert]

you are doing the right thing by starting early. the magic of compound interest is amazing, but it needs time to work. if i had started when i was 20, my retirement account would be alot higher than what it is now because of the extra 7 years of compounding interest.

with 10% interest, an amount will double in about 7 years on interest only.

lets say you are 20, you start with $3,000, you add $100 every month, and you invest in something that makes 10% interest every year. when you are 65 years old, you will have put only $58,200 into it, but the value will have grown to $1,285,708. if it makes 12% a year instead, it would be $2,596,858. the longer it sits, the faster it grows. amazing.

if you start at 30, it would be only $828,525 when you are 65. that is a difference of $1,768,333, just for waiting 10 years. ouch.

the more you can get into it, epsecially early, the bigger the payoff will be in the end.

get a roth ira, that way you will make out better on taxes when you cash in (unless the rules change).

have as much as possible automatically deducted from your paycheck, that way you never see the money and you don't have to remember to do it every couple of weeks.

be agressive, but buy mutual funds instead of individual stocks, and don't put all your money into one thing. individual stocks are much more risky than mutual funds.

 

[ROLLIN5.0]

be agressive, but buy mutual funds instead of individual stocks, and don't put all your money into one thing. individual stocks are much more risky than mutual funds.

I agree with most of your post, but I have to disagree with you here. A mutual fund is a pool of money that different investors put together, and then stockbrokers use the collective fund to invest in many different stocks/bonds. It is just a way for small money investors to diversify. The profit that compounds must pay the suits before you see anything. You can do this on your own, and keep all of your money. The magic number here is 30. Ideally, you want to be invested in atleast 30 different securities. This will bring you as close as possible to eliminating your risk (you can never totally eliminate it). You can build your own portfolio, which will resemble the various investments that are made with a mutual fund, without sharing your money. It will require a larger sum of money to get started, but it can be done. You would start by purchasing your safer securities such as stock in Wal-Mart for example, and make your more risky investments as you move down the line. I am not saying that mutual funds are a bad choice, I think that they should be a part of everyone's portfolio, but I feel just as strongly about individual stocks. Like I said above, more risk = more return .
Brandon

 

[BlackVert]

just remember that more risk can also mean bigger losses.

in order to do as well as a decent mutual fund, you have to really do your research and follow the markets pretty closely. that is all that mutual fund managers do, so they are going to be better at it than the average joe.

if you have the time and energy to stay on top of it yourself and build your portfolio from nothing, then more power to you.

i have other things to do with my time, so i have put my faith in mutual funds and i don't need to worry about 30 or more stocks every day.

 

[Sompin2do]

Can't go wrong with ING Direct! Easy to move money back to your checking if you need it and they actually answer the phone when/if you need to call. They also have some pretty good Money Market funds.
Another great place to look for money advice in general is a guy named David Bach. He talks about the "Latte Factor". His website is www.finishrich.com

 

[95CobraMike]

So lets say you had 15,000 to invest...and i had 400 a month to put into it... what would you do? IRA?

 

[whitesnake1994]

The magic number here is 30. Ideally, you want to be invested in atleast 30 different securities.

Yea but he only has 3000 dollors and there is NO way you can split that up in to 30 different securities. i would say 3 at most. most likely one low risk and one high risk.

And if you want to get into stocks go to www.scottrade.com and find a brach near you. you will need a minimum of 500 dollars (I beleive) to open an acoount and it needs to be a certified check from your bank. just go there and they will tell you what to do. It's only 7 dollars a trade. Cheapest i've seen. plus if you say you were reffered by me than we both get 3 free trades

 

[donjohn]

i really like this topic guys.... when i graduate in 2 years and start working, i plan to start up something like this right off the bat... some great ideas and good info here
Thanks.

 

[BlueOvalStangGT]

Ive heard that Roth IRA's arent available for everyone, are their certain requirements I need to fill? Ive decided im gonna start with a Roth IRA(if I can) just so I can start off my long term investing, and slowly add money into that until I need it. Then once I save up a little more money, ill start thinking what I want to do for shorter term investments.